Download presentation
Presentation is loading. Please wait.
Published byElvin Carr Modified over 9 years ago
1
Response to issues raised in the Portfolio Committee Public Hearings on the Labour Relations Amendment Bill and Basic Conditions of Employment Amendment Bill Document Number 449251 1
2
Introduction: a)The Department of Labour introduced the Labour Relations Amendment Bill (B16-2012) and the Basic Conditions of Employment Amendment Bill (B15-2012) in the National Assembly on 23 rd May 2012. b)The introduction of these Bills followed a two year process during which there were extensive negotiations on the Bills in the National Economic Development and Labour Council (NEDLAC) and two rounds of public meetings on the Bills and the changes to the Bills. c)After the first version of the Bills were published for public comment in December 2010, the Department commissioned a Regulatory Impact Assessment (RIA) on selected provisions of the Bills. 2
3
d) The NEDLAC negotiations resulted in substantial changes to the 2010 Bills, especially in the way that temporary employment is dealt with. e) In January 2012, the NEDLAC negotiations concluded on amendments to the LRA and the BCEA. f) While there were areas of difference in the NEDLAC negotiations, there was substantial agreement on many issues dealt with in the negotiations. Following the NEDLAC Protocol, constituencies are free to further engage Parliament on areas of disagreement. g) Revised Bills were submitted to Cabinet in April 2012 where they were approved for submission to the National Assembly. 3
4
h)The Public Hearings conducted by the Portfolio Committee attracted submissions mainly from organised business and organised labour, but also from interested parties such as the South African Local Government Association (SALGA), the South African Society for Labour Law (SASLAW) and the American Chamber of Commerce in South Africa (AmCham). i) The purpose of this response is not to deal with issues raised in each of the presentations, but to comment on key issues that were common to some presentations and to respond to specific issues where the Department would like to express its view. The aim of the document is to assist members of the Portfolio Committee to gain a balanced perspective on the amendments proposed to the LRA and BCEA. 4
5
1. Constitutionality of the amendments a)Both Bills have been submitted to the Office of the Chief State Law Adviser for a precertification opinion and have been found to be consistent with the Constitution. b)This does, however, not provide a guarantee that the Bills are completely consistent with the Constitution as issues may arise in the implementation of the Bills that could give rise to Constitutional challenges at a later stage. 5
6
c) During the Public Hearings, the constitutionality of limiting access of high income earners to the Commission for Conciliation Mediation and Arbitration (CCMA) was raised. d) Opinion is divided on this issue with some opposing the amendments and others feeling that it could be dealt with in a different way. e) The constitutional issue could be posed as an unnecessary limitation of the rights of certain categories of employee to refer disputes to the CCMA. 6
7
f) The amendment to section 188 does not interfere with the rights of any employee not to be dismissed for reasons that are automatically unfair under section 187. g) The amendment does also not stop high earning employees from seeking redress for unfair labour practices. h) The amendment is viewed by the Department as being a reasonable limitation of rights as outlined in section 36 of the Constitution. 7
8
2.Impact of the amendments on jobs a)An issue that attracted a lot of attention in the presentations of the business constituency and in the media, is the impact of the amendments on employment. b)The amendments that have been singled out are the equal treatment provisions, the power of the Minister to prescribe increases on actual rates of pay and the extension of bargaining council agreements. 8
9
Three general issues need to be borne in mind when assessing arguments about the impact on employment: i.Firstly, legal reform needs to proceed with due consideration to the rights of employees as well as the economic and employment impact of reforms. The Constitution requires that all employees are entitled to fair labour practices. The Employment Equity Act already prohibits unfair discrimination, direct or indirect, against any employee, in any employment policy or practice. 9
10
ii) Secondly, it is complex to predict employment impact on the basis of publicly available statistics. In the work done to date on the current labour law amendments, assumptions have to be made about the effect of restricting the operation of labour brokers with little ability to properly test these assumptions. A number of Bargaining Council collective agreements already restrict the operation of labour brokers and there has not been a negative change in employment in the sectors where these agreements apply. 10
11
iii) Thirdly, any assessment of likely job losses should ideally factor in short and medium term adjustments by affected employers. While there may be some job loss in the short term, there could well be a recovery over time as the temporary employment industry adjusts to new forms of regulation. 11
12
2.2. Regarding the assessment of impact of specific amendments, the following can be noted: i) Equal treatment a)The impact analysis conducted for BUSA draws on Statistics South Africa’s Quarterly Labour Force Survey (QLFS) to arrive at the number of people who work part-time in differently sized firms. The firms include those with one person - a total of 689 284 if one disregards the number of hours worked. Firms with one person can only be self-employed, most likely consultants. To include them in calculations of how increases in employment costs will impact on jobs, distorts the picture quite significantly. This is just one example of the shaky basis on which job losses are estimated. 12
13
b) The assumption in the analysis is that benefits account for “around 25% of the cost-to-company of the personnel expenses”. A second assumption used is that a wage elasticity of 0.7 % can be applied across all types of workers. On this basis, a calculation is made to arrive at expected job losses of 215,150 jobs. Along with the problematic use of employment figures to make this calculation, wage elasticity could be very variable across different categories of employment. For example, the way in which demand for labour changes when skilled workers become more expensive is very different to the change in prices of unskilled labour. 13
14
c) What is also important is that the impact analysis for business does not engage accurately with the proposed amendment. The amendment to section 198A reads: “An employee deemed to be an employee of the client in terms of subsection (3)(b) must be treated on the whole not less favourably than an employee of the client performing the same or similar work, unless there is a justifiable reason for different treatment.” 14
15
d) The first important point is that the equal treatment provision only applies after the six months of temporary employment. The impact analysis is not able to make any distinction between employees who work part-time and those who may be deemed to be employees of a client after a six month period. e) Secondly, the cost of benefits relate to the wage that an employee receives as these are calculated on a percentage basis. Elsewhere the amendments give pointers to grounds for justifiable different treatment, for instance, skill, experience and length of service. So, wages may differ for justifiable reasons between a permanent worker and a deemed employee who have different levels of skill and experience. The benefit package will differ accordingly. 15
16
f) The impact analysis must, therefore, be treated very cautiously in relation to its assessment of impact of equal treatment provisions on cost to company. g) It is worth recognising that equal treatment needs to be viewed in the context of the history of discrimination in South Africa. The Constitution also has a strong emphasis on equality and prohibiting unfair discrimination. h) Finally, South Africa is not alone in introducing legislative provisions to ensure equal treatment of temporary workers. In China, labour hire workers must be paid at the same rate as workers in the user firm who are engaged in similar work. In Korea since 2008, employers have been required to provide equal pay and benefits to hired workers. 16
17
ii. Wage increases on actuals a)It is the intention of the Department to provide for wage increases on actuals only for certain categories of vulnerable workers. The impact analysis estimates job losses across a whole range of sectors rather than a select few, thereby amplifying the estimated job losses. b)The impact analysis study also does not take into account the way in which the Minister of Labour may prescribe increases in terms of this amendment. For instance, the Minister may prescribe minimum increases linked to years of service which would have a very different impact than an across the board increase on minimum rates of a pay. 17
18
iii. Bargaining council extensions a)The impact analysis done for business does not engage accurately with the proposed amendments relating to collective bargaining. It assumes that the effect of the amendments will be an increase in the size of the workforce covered by bargaining council agreement. This refers to the amendment to section 32 (5A) which enables the Minister to take account of the extent of atypical employment in a sector when determining whether the parties to a council are sufficiently representative. b)It has nothing to do with increasing the coverage of an agreement, but has to do with how to decide on representivity when faced with the particular make-up of the work force within a sector. 18
19
c) The impact analysis goes on to estimate the impact of coverage of extended agreements using research that suggests that there will be between 7% and 16% reduction of employment in small firms when Bargaining Council collective agreements are applied to them. d) No explanation is provided for this method and the original research on which it draws is not summarised in the paper. The paper also does not make any allowance for the fact that certain agreements have special dispensations for small firms. e) In short, the impact analysis carried out for business estimates a dramatic impact on employment in ways that are problematic and that could very well exaggerate the real impact. 19
20
2.3. Regulatory Impact Assessment a)There has been a call by BUSA for a second Regulatory Impact Assessment (RIA) to be conducted on the Bills that are before Parliament. The Department conducted a RIA in 2011 at the request of a Cabinet Committee. This RIA was carried out in terms of Guidelines that make no provision for second or repeat RIA’s. b)Legislative reform cannot be delayed for long periods by impact assessment studies that are complex to conduct and where the results are very likely to remain contentious. This issue should also be seen in the light of an on-going situation where the rights of employees are being abused and where the existing legislation, that is the current version of section 198 in the LRA, “offends the constitutional entrenchment of labour rights guaranteed in terms of section 23 of the Constitution.” Judgement by Steenkamp J, Case C418/11, K Dyokwe vs Coen de Kock, CCMA et al. pg. 14. 20
21
2.4. Organisational rights a)Submissions with regard to amendments to section 21 dealing with the exercise of organisational rights have been both criticised and supported. b)Business have generally not supported extending rights to minority unions whereas organised labour support both giving consideration to atypical employees when determining representivity as well as extending rights to minority unions. 21
22
c) These amendments are important given the real difficulty faced by trade unions in representing atypical employees in any workplace. d) It would be a legitimate balancing of power for a commissioner to exclude temporary, part-time and contract workers when considering the composition of the workforce for the purposes of representivity of trade unions seeking organisational rights. e) The extension of organisational rights to minority unions is provided for in quite limited and specific circumstances. f) A commissioner in an arbitration may grant rights referred to in sections 14 and 16 if no other union has been granted that right. These rights relate to trade union representatives and access to information. 22
23
g) Both of these rights should enhance communication and engagement between employees, their representatives and employers. Moreover, this right lapses if the trade union concerned is no longer the most representative union in the workplace. 23
24
2.5. Exclusion of senior managers from CCMA a)The amendment to section 188B has attracted a number of comments in the submissions, most importantly, the indication that the exclusion of senior managers from the CCMA could be unconstitutional. As stated above, the Department is of the view that the proposed amendment is a justifiable limitation on the rights of senior managers as they would still enjoy protection from unfair dismissal. b)Senior managers are also able to negotiate protection through their contracts of employment, for instance, to notice periods and to make provision for private arbitration. They would still be able to refer disputes to the Labour Court for certain categories of dismissal cases. 24
25
c) The impact of dismissal cases of senior managers on the CCMA has been referred to as a relatively small number of cases. The real impact should, however, be assessed in relation to the time that these cases take in the CCMA relative to other cases and not just the number of cases. 25
26
2.6. Compliance and enforcement There are two areas requiring a response in relation to compliance and enforcement, the first relates to amendments that change the functions of labour inspectors and the enforcement of compliance orders, and the second relates to fines and penalties. i.The amendment to section 68 of the BCEA gives labour inspectors the discretion as to whether they try to secure a written undertaking by an employer or whether they move directly to issuing a compliance order. 26
27
ii) The ability of inspectors to exercise this discretion is important in the context of high rates of non-compliance and experience of employers who do not adhere to their undertakings. The intention is not to remove the use of undertakings in genuine cases, but to ensure that inspectors do not waste time with employers who do not stick to their promise to rectify certain situations in their workplace. iii. An amendment to section 93 of the BCEA doubles the maximum term of imprisonment for contraventions in relation to clauses prohibiting and regulating work by children and to prevent fraud that may occur in relation to disclosure of information as covered by section 90 of the BCEA. 27
28
These amendments were agreed to by organised business during the NEDLAC negotiations. Organised business included representation of AGRI SA and the matter should not be raised again in the Parliamentary process in terms of the NEDLAC protocol. 28
29
2.7. Labour tenants a)The amendment to section 55(4)(p) is intended to make provision for the Minister to establish a method for determining the conditions of service for labour tenants who have a right to occupy or use a part of a farm. The Land Reform (Labour Tenants) Act, 1996, requires that the conditions of service of a labour tenant may not be generally less favourable than the conditions applicable to farm workers in terms of the BCEA (section 4). b)This amendment is, therefore, addressing situations where labour tenants derive income from occupying and/or using land. This income should be taken into account when deciding what minimum wage increases apply to labour tenants. A method for placing a value on the access to a part of a farm by labour tenants needs to be determined so that appropriate minimum wages can be set through future sectoral determinations for farming. 29
30
2.8. SASLAW a)A detailed submission was provided by the South African Society for Labour Law (SASLAW). b)A number of points were raised that will require technical amendments where wording or numbering is not clear in the Bill. These are not repeated below. c) The following table summarises the clauses and sections where SASLAW had particular views and/or recommendations that the Department wishes to respond to. 30
31
30(b)158(1B) The Department disagrees with the proposal to exclude jurisdictional issues from the limitation placed on review proceedings. ‘Jurisdictional issues’ is vague and may open the way for a series of tests relating to what may or may not be reviewed. 36187(1)(c) SASLAW is proposing that the section be clarified. The Department is of the view that the section is sufficiently clear as it stands. 38188B It is agreed that the issue raised by SASLAW relating to possible abuse of section 188B to deprive senior managers of severance pay should be dealt with. 39(a) 189 A(2)(d) The Department disagrees with SASLAW’s view that extending the period for consultation over operational requirements dismissals may defeat the object of the section. 44198A(3) The Department views the “deeming” provision to be clear in that it applies to employees earning below the threshold who are retained in employment by a client after a six month period and that is such cases, the equal treatment provision applies. Equal treatment 44198A(5) The equal treatment provision applies to persons on fixed term contracts whose contracts extend beyond a six month period. BCEA 233Reject in respect of purchase of goods or service as these will only be justified if there is benefit; accept “or other”; also need for clause dealing with pension, provident and medical aid funds. 31
32
3. New issues After consideration of the amendments to the LRA, a number of changes have been identified which are required to clarify and/or improve on current drafting of the amendments. These are as follows: 3.1. Amendment of section 21 – It will be necessary to delete either 8(A), 8(B) and 8(C) or delete 8(D). This is in order to avoid duplication. 3.2. Amendment of section 32 – A further amendment to the 60 day extension rule in section 32(2) will be required to accommodate the new procedure introduced under section 32(5). 32
33
3.3. Amendment of section 144 – The new paragraph (d) will require further amendment to read: “(d) made in the absence of any party on good cause shown.” This is to clarify that it is a common law rescission ground and not some kind of appeal jurisdiction. 3.4. Amendment of section 153 – A new amendment is required to replace the words ‘Supreme Court’ with ‘High Court’ or ‘Labour Court.’ This is for consistency and accuracy. 3.5. Amendment of section 198 – A further amendment will be required to section 4(B) to clarify that a temporary employment service will be required to specify whether section 198 applies in written particulars of employment. Section 4(C) should also be amended to include all collective agreements as part of the instruments that apply to a client who uses temporary employees. 33
34
3.6. Amendment of section 198A to D – Further amendments are required to clarify the wording of section 198A(2) in relation to (3) and a cross reference to the Employment Equity Act is required. Changes to the wording of Section 198A (3) and (4) were agreed and need to be incorporated as follows: s.198A(3): For the purposes of this Act, an employee referred to in subsection (2) who is– performing temporary services as contemplated in sub-section (1) for the client is the employee of the temporary employment service in terms of section 198(2); 34
35
not performing such temporary services is deemed to be - the employee of that client and the client is deemed to be the employer; subject to the provisions of section 198B, employed on an indefinite basis by the client. (4)The termination of an employee’s assignment with a client, whether at the instance of the temporary employment service or the client, for the purpose of avoiding the operation of subsection (3)(b) or because the employee exercised a right in terms of this statute is a dismissal. 35
36
DLA Cliff Dekker Hofmeyer: a)The submission by DLA Cliff Dekker Hofmeyer on behalf of the Real Estate Business Owners of SA relates to the alleged divergent views on whether estate agents are employees or independent contractors. b)This matter has been dealt with in judgements handed down by the Labour Court and does not require further amendment to the LRA which, in any event, takes precedence over the Estate Agents Act in matters relating to labour relations. 36
37
South African Local Government Association (SALGA): a)One issue raised by SALGA that is not dealt with elsewhere relates to refuse collection being declared an essential service. Currently, refuse collection only becomes an essential service after 14 days of non-collection. b)SALGA’s submission requests a provision in the LRA to make provision for refuse collection to be an essential service. Such a provision is not appropriate in the LRA, but SALGA should rather approach the Essential Services Committee to conduct an investigation. Such an approach should be made by the South African Local Government Bargaining Council in terms of section 70 of the LRA. 37
38
Finally, the amending bill does not include transitional provisions to deal with the implications of the amendments for existing arrangements. This is particularly relevant to amendments that will have an effect on existing contracts of employment at the time that the amendments are promulgated, for example, contractual arrangements dealt with in terms of section 198A to D. 38
39
THANK U 39
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.